Manila Peninsula Hotel

Makati City

3:35 PM, March 27, 2012

„Creating The Next Business Hub For Manufacturers‟

A presentation for the:

Euromoney Conference Workshop

hosted by: RCBC

Presented by:

DR. LILIA B. DE LIMA

Director General

and

Undersecretary, Department of Trade & Industry

An investment promotion and incentive granting

agency attached to the Department of Trade and

Industry.

Reinforce Government‟s efforts to:

• Promote Investments

• Create Employment

• Generate Exports

Philippine Economic Zone Authority

TOTAL OF 257 ECONOMIC ZONES * as of 29 February 2012BAGUIO CITY ECONOMIC ZONE

JOHN HAY SPECIAL TOURISM ECONOMIC ZONESANCTUARY IT BUILDING

SM BAGUIO CYBERZONE BUILDINGFORT ILOCANDIA TOURISM ECONOMIC ZONE

PANGASINAN INDUSTRIAL PARK IILUISITA INDUSTRIAL PARK

TECO SPECIAL ECONOMIC ZONETARLAC PROVINCIAL INFORMATION TECHNOLOGY PARK II

SM CITY PAMPANGA ROBINSONS LUISITA

CLARK TI SPECIAL ECONOMIC ZONEANGELES INDUSTRIAL PARK

PAMPANGA EXPORT PROCESSING ZONESTA. MARIA INDUSTRIAL PARK

SUPIMA ECIRCLEPHILIPPINE PACKING AGRICULTURAL EPZ

VICTORIA WAVEROBINSONS PLACE NOVALICHES

DILIMAN IT BUILDINGCONVERGYS IT BUILDING

HTMT CYBER PARKEDSA CENTRAL IT CENTER

SUN PLAZA EDSA CENTRAL IT CENTER 2

E-SQUARE INFORMATION TECHNOLOGY PARKTOTAL CORPORATE CENTER I MCKINLEY HILL CYBER PARK

MARKET! MARKET!ST. LUKE‟S MEDICAL CENTER GLOBAL CITY

MULTINATIONAL BANCORPORATIONPEOPLESUPPORT CENTER IT BUILDING

NORTHGATE CYBERZONEMETROPOLIS STAR

MACROASIA ECOZONEASAHI SPECIAL ECONOMIC ZONE

EUGENIO LOPEZ JR. COMMUNICATION CENTERGLOBAL TRADE CENTER

EASTWOOD CITY CYBERPARKSMNE IT CENTER

EXPORTBANK PLAZA BUILDINGTHE ENTERPRISE CENTER

RCBC PLAZABURGUNDY CORPORATE TOWER

LIBRAN HOUSE IT CENTERMJ PLAZA

MANILA HARBOUR CENTERNEWPORT CITY CYBERTOURISM ZONE

SM ICITYSM ICITY 2

SM CYBERZONE 1G.T. TOWER INTERNATIONAL

THE PASEO CENTER IT BUILDINGAMKOR TECHNOLOGY

PACIFIC INFORMATION TECHNOLOGY CENTERJGC PHILIPPINES BUILDING

SDC IT BUILDING ASIAN STAR BUILDING

THE PARAGON CORPORATE CENTREROBINSONS CYBERPARK

ROBINSONS-EQUITABLE TOWERPBCOM TOWER

ANSON‟S CENTERSUMMIT ONE OFFICE TOWER

PHILAMLIFE I.T. BUILDING6750 AYALA AVE. BLDG.

6780 AYALA6788 AYALA AVE. BLDG.

JG SUMMIT CENTERDELA ROSA E-SERVICES BUILDINGSM MAKATI CYBERZONE BUILDING

SM MAKATI CYBER ZONE 2 BUILDINGGLORIETTA 5

UNIONBANK PLAZABPI BUENDIA CENTERALLEGRO IT CENTER

EAST CYBER GATEWORLDWIDE CORPORATE CENTER

GATEWAY OFFICE TOWERCYBER PARK BUILDING ONE

PACIFIC STAR BUILDINGPHILAMLIFE IT TOWER

NISCOM IT BUILDING INSULAR LIFE BUILDING

INSULAR LIFE CORPORATE CENTER

CAVITE ECONOMIC ZONELAGUNA INT‟L. INDUSTRIAL PARKLIGHT INDUSTRY & SCIENCE PARK ILIGHT INDUSTRY & SCIENCE PARK IILIGHT INDUSTRY & SCIENCE PARK IIITABANGAO SPECIAL ECONOMIC ZONELAGUNA TECHNOPARK LAGUNA TECHNOPARK ANNEXFIRST CAVITE INDUSTRIAL ESTATEGATEWAY BUSINESS PARKKEPPEL PHILIPPINES MARINE SPECIAL ECONOMIC ZONEGREENFIELD AUTOMOTIVE PARKYTMI REALTY SPECIAL ECONOMIC ZONELIMA TECHNOLOGY CENTERCOCOCHEM AGRO INDUSTRIAL PARKPEOPLE‟S TECHNOLOGY COMPLEXSAN LAZARO TOURISM AND BUSINESS PARKGOLDEN MILE BUSINESS PARKFIRST PHILIPPINE INDUSTRIAL PARKTIGERLAND AGRO-INDUSTRIAL ECONOMIC ZONECARMELRAY INDUSTRIAL PARKCARMELRAY INDUSTRIAL PARK IICALAMBA PREMIERE INTERNATIONAL PARKTOYOTA STA. ROSA SEZAG&P SPECIAL ECONOMIC ZONE DAIICHI INDUSTRIAL PARKALLEGIS IT PARKFILINVEST TECHNOLOGY PARK - CALAMBAEASTBAY ARTS, RECREATIONAL AND TOURISMSM CITY BACOORLAKESIDE EVOZONEROBINSONS BIG R SUPERCENTERSTA. ROSA COMMERCIAL IT PARKROBINSONS PLACE STA. ROSA SAINT FRANCES CABRINI MEDICAL TOURISM PARKPHILTOWN TECHNOLOGY PARKROBINSONS PLACE LIPAPAMALICAN ISLAND TOURISM ECOZONECAMARINES SUR IT PARKBORACAY ECO-VILLAGE RESORT MACTAN ECONOMIC ZONEBIGFOOT IT PARKMACTAN ECONOMIC ZONE IISYNERGIS IT CENTER HDMF-WTCI IT TOWERCEBU IT TOWERMANGO SQUARECEBU SOUTH ROAD PROPERTIESARCENAS ESTATE IT BUILDINGA. D. GOTHONG IT CENTERJY SQUARE IT CENTERJY SQUARE IT CENTER III CEBU LIGHT INDUSTRIAL PARKLEXMARK PLAZA OAKRIDGE INFORMATION TECHNOLOGY CENTER PHIL. BXT CORP. TOURISM ECONOMIC ZONEPIONEER HOUSE CEBUWEST CEBU INDUSTRIAL PARKNEW CEBU TOWNSHIPMRI ECONOMIC ZONEHVG ARCADE IT PARKINNOVE IT PLAZAASIATOWN IT PARKFEDERATED IT PARKDAMOSA IT PARKROBINSONS CYBERGATE CENTERPUEBLO DE ORO IT PARKJASAAN MIS. ORIENTAL ECOZONEBUKIDNON AGRO-RESOURCES EXPORT ZONEDBP IT PLAZATHE BLOCK IT PARKONE SANPARQLOPUE'S EAST I. T. CENTER LUXUR PLAZA ITFORMATION CENTRE SMCI IT CENTERCIIF AGRO-INDUSTRIAL PARKRIO TUBA EXPORT PROCESSING ZONESARANGANI ECONOMIC DEVELOPMENT ZONESRC ALLAH VALLEY ECONOMIC DEVELOPMENT ZONESRC CALUMPANG ECONOMIC DEV‟T. ZONEFIRST ORIENTAL BUSINESS & INDUSTRIAL PARKNCCC DAVAO IT CENTERLUISA AVENUE SQUARE IT CENTER NCCC DAVAO IT CENTERMANTICAO ECOZONE CORPORATION SEZ

MARVIN PLAZA BUILDINGDPC PLACE BUILDINGMSE CENTERTRAFALGAR PLAZAOCTAGON IT BUILDINGVITRO INTERNET DATA CENTER BUILDINGWYNSUM CORPORATE PLAZA IT BUILDING TRANSCOM CENTERORIENT SQUARE IT BUILDINGRIVERBANK CENTER ICT BLDG. IRIVERBANK CENTER ICT BLDG II BLUE WAVE MARIKINAUP SCIENCE & TECHNOLOGY PARK (South)UP SCIENCE & TECHNOLOGY PARK (North)

FOOD TERMINAL INC. SEZEMI SPECIAL ECOZONE

BATAAN ECONOMIC ZONESUBIC SHIPYARD

PLASTIC PROCESSING CENTER SEZHERMOSA ECOZONE

LEYTE IND‟L. DEVELOPMENT ESTATEMEGACENTER IT BUILDING

LEYTE INFORMATION COMMUNICATION TECH. PARKJOSE PANGANIBAN SEZ

MISIBIS RESORTS AND ESTATESRAPU-RAPU ECOZONE

Manufacturing Economic Zones

Information Technology Parks / Centers

Tourism Economic Zones

Medical Tourism Park /Center

Agro-Industrial

64

164

12

2

15

* Legend:

MANILA

CEBU

64

164

12

2

15

Manufacturing

IT Parks (35) and IT Centers (129)

Tourism Ecozones

Medical Tourism Park / Center

Agro-Industrial Parks

1995 – 2011 Economic Zone Investments : P 1.995 Trillion

449%

24%

144 % 61 % .6%

EPZA

PEZA

12.7 B9.6 B

„86 -‟931994

52.5 B65.3 B

159.7 B96.9 B

155.7 B156.7 B80.8 B38.7 B31.7 B50.5 B67.2 B83.7 B

133.7 B154.8 B175.4 B204.4 B288.3 B

19951996199719981999200020012002200320042005200620072008200920102011

ECONOMIC ZONE INVESTMENTS

89

300

270

240

210

180

150

120

90

60

30

0

57 %

33 %

25 %

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06

60 %

07

16 %

08

13 %

09 10

16.6 %

11

41.1 %

LOCATOR INVESTMENTS BY NATIONALITY( 1995 – 2011 )

20.89 % Filipino

18.32 % American

6.35 % British

7.80 % Dutch

2.52 % Singaporean

1.50 % German

3.89 % Others

3.86 % Korean

1.29 % Swiss

33.58 % Japanese

LOCATOR INVESTMENTS BY PRODUCT SECTOR( 1995 – 2011 )

Information Technology

Services

Transport (Shipbuilding,

Car Parts, Equipment)

Electrical Machinery

and Apparatus

Medical, Precision and

Optical Instruments

Tourism

Rubber and Plastic Products

Chemical and Chemical Products

Other Manufactures

5.91 %

5.08 %

2.45 %

6.22 %

1.32 %

0.95 %

15.60 %

Metals/Fabricated Metal Products

Medical Tourism1.92 %

7.70 %

10.33 %

42.52 %

Electronics /

Semiconductors

In Billion US Dollars1995 : US $ 4.284

1996 : US $ 6.500

1997 : US $ 10.626

1998 : US $ 13.270

1999 : US $ 15.807

2000 : US $ 20.025

2001 : US $ 19.498

2002 : US $ 22.775

2003 : US $ 27.313

2004 : US $ 30.924

2005 : US $ 32.030

2006 : US $ 36.077

1994 : US $ 2.739

2007 : US $ 40.889

56.4 %

51.7 %

63.5 %

24.9 %

19.1 %

26.7 %

- 2.5%

16.8%

19.9%

13.2%

3.6%

12.6%

13.3%

2008 : US $ 40.543

ECOZONE EXPORTS

- 0.84%

2009 : US $ 32.898 -18.86%

2010 : US $ 40.473 23.02%

2011 : US $ 42.144 4.13%

PHILIPPINE MANUFACTURED EXPORTS ( Billion U.S. Dollars )

40

35

30

25

20

15

10

5

0

45

2.7

9.5

22%

78%

12.2

1994

6.5

12.0

35%

65%

18.5

1996

10.6

11.0

49%

51%

21.6

1997

13.3

12.8

51%

49%

26.1

1998

15.8

15.9

50%

50%

31.7

1999

20.0

14.3

58%

42%

34.3

2000

19.5

9.1

68%

32%

28.6

2001

22.7

8.8

72%

28%

31.5

2002

27.2

4.8

85%

15%

32.0

2003

30.7

4.8

86%

14%

35.5

2004

31.6

5.3

86%

14%

36.9

2005

35.1

6.0

85%

15%

41.1

2006

36.9

5.9

86%

14%

42.8

2007

37.9

6.1

86%

14%

44.0

2008

Economic Zone Manufactured Exports

Other Philippine Manufactured Exports

4.3

11.5

1995

27%

73%

15.8

28.9

4.3

87%

13%

33.2

2009

1995

1997

1996

1998

1999

2000

2001

2002

2003

2004

2005

2006

121,823

152,250

183,709

219,791

247,076

91,860

278,407

289,548

328,384

362,851

406,752

451,279

545,025

1994

2007 593,108

2008 608,387

ECOZONE DIRECT EMPLOYMENT

2009 611,058

2010 735,672

2011 840,945 14.31%

WHY INVEST IN

THE PHILIPPINES

• 100% Foreign Ownership of Companies;

• Basic rights of Investors are guaranteed (right to remit profits and pay foreign obligations, right to repatriate investments)

BUSINESS-FRIENDLY POLICIES

Literate, English – speaking, easy to train,hardworking , very friendly, and always smiling

FILIPINO WORKERSAmong the Best in the World

THE COUNTRY‟S COMPETITIVE EDGE

VERY FAST LEARNING CURVE

OF FILIPINO WORKERS

• 8 weeks (2 months) to train Filipino workers

• Compared to 16 to 24 weeks (4 to 6 months) to train workers in other countries.

STRATEGIC LOCATION

Russia

EUROPEUnited States

of America

South

AmericaPacific Ocean

Atlantic Ocean

Australia

JapanKoreaChina

IndiaAfrica

Taiwan

Hong Kong Philippines

Thailand

MalaysiaSingapore

Indonesia

Germany

France

United

Kingdom

Canada

Middle

East

VERY HOSPITABLE and COMFORTABLE

SECOND HOME to EXPATRIATES

• Very friendly attitude of Filipinos towards foreigners

• Availability of quality primary and secondary education

Presence of International Schools

• Housing closest to meeting western standards at very

reasonable rental rates

• Best sporting and recreational facilities

Many world-class golf courses.

• World class health care services

(Result of a survey conducted on expatriates in Asia)

WHY INVEST IN

PEZA ECONOMIC ZONES

A. FISCAL INCENTIVES

B. NON-FISCAL INCENTIVES

• Income Tax Holiday (ITH) or Exemption from Corporate Income Tax for four years, extendable to a maximum of eight years;

• After the ITH period, payment of the special 5% Tax on Gross Income, in lieu of all national and local taxes;

• Exemption from duties and taxes on imported capital equipment, spare parts, supplies, and raw materials;

• Domestic sales allowance of up to 30% of total sales;

• Zero Value-Added Tax (VAT) Rate on local purchases to include telecommunications, power, and water bills;

• Exemption from payment of local government taxes and fees.

FISCAL INCENTIVES for EXPORT COMPANIES

• Employment of foreign nationals;

• Special visa for foreign investors and immediate family members.

NON-FISCAL INCENTIVES for EXPORT COMPANIES

FAST TURNAROUND

ESPECIALLY FOR ELECTRONICS

96 HOURS OR 4 DAYS TO COMPLETE THE PRODUCTION CYCLE:

DAY 1

• Japanese or Asian company sends raw materials to thePhilippines.

• Raw materials arrive in the Philippines on the same day.• Cleared by Customs on the same day.• Received by the Economic Zone Company on the same day.

DAY 2 - DAY 3

• Products are manufactured.

DAY 4

• Finished products brought to the Port.• Cleared by Customs on the same day.• Shipped to Japan or Asian country on the same day.• Arrive in Japan or Asian country on the same day.

PEZA IS A

ONE-STOP SHOP• Building and Occupancy Permits are issued by PEZA.

• Import and Export Permits are issued by PEZA.

• Automated and web-based Import & Export Procedures and e-

Payment System (Paperless Transactions).

• Special multiple-entry non-immigrant visa processed in PEZA.

• Environment Clearance processed thru PEZA.

• Registration requirements simplified, registration forms

downloadable from website and uncomplicated, approval made

easy.

• At the zones, PEZA provides 24 hours a day, 7days a week of continuous service to locatorcompanies.

• The Director General herself and other PEZAofficials are on call 24 hours a day, 7 days aweek.

PEZA IS A

“NON-STOP SHOP”

• NO RED TAPE

• ONLY RED CARPET TREATMENT

In PEZA,

In PEZA, there is

NO GRAFT

NO CORRUPTION

SUPPORT SERVICES

TO

MANUFACTURING

AND

AGRO-INDUSTRIAL SECTORS

INCENTIVE FOR LOGISTICS ENTERPRISES

Tax and duty free importation of raw materials.

INCENTIVE FOR FACILITIES ENTERPRISES(They provide build-to-suit or lease buildings.)

Special 5% Gross Income Tax,

in lieu of all national and local taxes.

• Accredited Brokers, Truckers and Forwarders To ensure companies deal only with legitimate entities and so that PEZA can also monitor performance of these service providers

• Encouraged Developers to have developed areas available for manufacturing

• Assisted in reduction of power. Now we are assisting companies to prepare for open access.

• Strategic Location of Batangas Port- strongly pushing for Batangas Port as primary port for CALABARZON locators

- reduced PEZA fees by 50% for shipment using the Batangas Port- assigned Staff to process shipments in the Batangas Port

ISO 9001:2008

PEZA‟s Quality

Management System is

certified ISO 9001:2008.

PEZA is certified ISO

9001:2008 for all its

processes, at all levels, in

all sites, nationwide.

ONLY PEZA CITED FOR BEST PRACTICE

AMONG ECONOMIC ZONES WORLDWIDE

“Under PEZA, the Philippines has shown dramatic

improvements in Investment Climate.

End Result – PEZA is a shining example of

successful regulatory reform improving overall

investment climate in the country”

Study of Gohan Akinci, Foreign Investment Advisory

Services (FIAS), International Finance Corporation of the

World Bank (IFC-WB)

We now have a

Reformist

Government that

is open for

business.

President Aquino‟s

Policy Thrusts:

1. Good Governance

2. Level Playing Field

3. Transparency

4. No Corruption

CREATING

JOBS, LIVELIHOOD,

INCOME FOR

FILIPINOS

IN THE

COUNTRYSIDE

Philippines‟ Competitive Advantage on

Business Environment in Comparison to

other Asian Countries

January 2012

Japan External Trade Organization (JETRO) Manila

1. Moderate Cost

1.1 Problems of increasing financial costs

64.1

61.5

56.7

54.6

53.6

51.9

46.7

0 10 20 30 40 50 60 70

China

Malaysia

Thailand

India

Vietnam

Indonesia

Philippines

(%)

Source: JETRO, 2011 Survey of Japanese-Affiliated Firms in Asia and Oceania (Aug-Sept, 2011)

* All the succeeding data has the same source.

1.2 Problems in shortage of land/offices,

rising land prices/rental

32.0

18.0

17.2

12.7

9.8

5.8

0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0

India

Vietnam

Indonesia

Thailand

Malaysia

Philippines

(%)

1.3 Problems in skyrocketing payroll costs

61.3

48.1

45.2

40.8

27.5

18.2

0 10 20 30 40 50 60 70

Vietnam

Thailand

India

Indonesia

Malaysia

Philippines

(%)

2. Sufficient Labor Supply

2.1 Difficulty in recruiting general staff

36.7

31.2

31.1

28.6

4.4

4.2

3.2

0 5 10 15 20 25 30 35 40

Vietnam

Malaysia

Thailand

China

Indonesia

India

Philippines

(%)

2.2 Difficulty in recruiting executives

64.3

52.8

46.9

43.0

41.9

40.0

39.0

37.9

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0

Myanmar

Vietnam

India

Indonesia

China

Thailand

Philippines

Malaysia

(%)

2.3 Low rate of worker‟s employment

retention

48.7

42.5

41.6

39.0

33.6

30.6

0.0 10.0 20.0 30.0 40.0 50.0 60.0

Vietnam

Malaysia

India

China

Thailand

Philippines

(%)

2.4 Problems of worker‟s competency

56.3

48.7

47.6

45.8

44.7

42.2

40.9

37.9

0 10 20 30 40 50 60

Myanmar

Vietnam

China

India

Malaysia

Indonesia

Thailand

Philippines

(%)

2.5 Difficulty in Quality Control (Manufacturing only)

45.5

43.4

41.0

40.7

39.3

28.7

26.7

0 5 10 15 20 25 30 35 40 45 50

India

China

Malaysia

Thailand

Vietnam

Indonesia

Philippines

(%)

3. Reasonable Salary

3.2 Annual Salary *

Manufacturing Staff

6,340

5,765

5,662

4,495

4,048

3,980

2,196

- 1,000 2,000 3,000 4,000 5,000 6,000 7,000

Malaysia (n=170)

China (n=474)

Thailand (n=470)

India (n=70)

Philippines (n=66)

Indonesia (n=78)

Vietnam (n=89)

(US $)

* including bonuses, allowances, SSS, etc

3.3 Annual Salary

Manufacturing Engineer

16,092

11,464

10,559

9,937

7,093

6,494

4,793

- 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

Malaysia (n=165)

Thailand (n=449)

India (n= 71)

China (n=424)

Indonesia (n=68)

Philippines (n=59)

Vietnam (n=86)

(US $)

3.4 Annual Salary

Manufacturing Managers

30,999

26,580

24,596

17,830

17,593

16,544

11,526

- 5,000 10,000 15,000 20,000 25,000 30,000 35,000

Malaysia (n=168)

Thailand (n=445)

India (n= 78)

China (n=436)

Philippines (n=63)

Indonesia (n=77)

Vietnam (n=80)

(US $)

3.5 Annual Salary

Non-Manufacturing Staff

14,554

12,344

10,379

10,088

7,324

6,852

5,199

- 5,000 10,000 15,000 20,000

Malaysia (n=78)

China (n=226)

Thailand (n=262)

India (n=95)

Philippines (n=40)

Indonesia (n=39)

Vietnam (n=27)

(US $)

3.6 Annual Salary

Non-Manufacturing Manager

35,117

27,610

25,842

25,179

23,068

19,187

14,977

- 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000

Malaysia (n=76)

China (n=205)

Thailand (n=239)

India (n=88)

Indonesia (n=40)

Philippines (n=37)

Vietnam (n=24)

(US $)